We've often talked about saving a debtor's home using bankruptcy; but sometimes a bankrupt debtor may discover that surrendering their home during bankruptcy may be the most logical solution to their financial problems. If you file bankruptcy and decide to surrender your home to the mortgage lender, there are a few things you need to know.
- Even if a debtor surrenders his/her home during a Chapter 7 bankruptcy , the creditor must still foreclosure on the property to receive ownership on the property.
- The debtor will remain the owner of the property until the creditor forecloses and obtains ownership.
- If the creditor has not foreclosed on the property, the debtor is still responsible for maintaining the required insurance on the home. This is important because if someone is injured on the property, the debtor could be held liable (if there is no insurance).